Sunil ,
The guidance note of ICAI on tax audit , clearly states that advances received towards sales are in the nature of liability (current liability and not loan ) and cannot be said to be receipts of the business . I dont rememeber the para no of the guidance note , but it clearly states that "Advances are NOT to be counted as receipts of the business for 44AB" . I dont understand how current liabilties can be said to be receipts of the business .
Uday ,
I personally believe that the order given by mumbai tribunal is "Bad in law " .If the intention of the legislature was to include purchases in turnover , then why only gross receipts of business are included , they would have also inluded "gross expenses" . Similarly Advances paid towards future purchases would also be included . I am no authority to decide the order of the tribunal , its just a humble opinion , that the order seems bad in law . I dont agree with the view that purchases over 40 lacs attract audit .
But since its an order of the respected tribunal , i guess we should better follow it. I will be surprised , if it wasnt appealed against .
The term turnover is not defined in the IT Act , hence the meaning assigned to it will be (as per me ) :-
definition of "turnover" as given in Random House Dictionary, 1972 edn., at page 1418, which reads as under "the total amount of business done in a given time."
The rules of construction which stipulate that when two or more words susceptible of analogous meaning are coupled together with nosc*nter a sociis, they are understood to be used in their cognate sense.
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